Newt Gingrich: Budget & Economy

19022012

Don’t bail out Freddie Mac & Fannie Mae; break them up

Rep. PAUL: [to Gingrich]: He received a lot of money from Freddie Mac. While he was earning a lot of money from Freddie Mac, I was fighting over a decade to try to explain to people where the housing bubble was coming from. So Freddie Mac is bailed out by the tax payers. So in a way, Newt, I think you probably got some of our tax payer’s money.

GINGRICH: First, the housing bubble came from the Federal Reserve inflating the money supply. Second, I was never a spokesman for any agency, I never did any lobbying for any agency. I offered strategic advice. I was in the private sector. You’re allowed to charge money for it. It’s called free enterprise. I’m not for bailing them out, in fact, I’m for breaking them up.

Q: Rep. Bachmann, you called Speaker Gingrich a “poster boy of crony capitalism.”

BACHMANN: Well, when you’re taking over $100 million, and you’re taking money to influence the outcome of legislation in Washington, that’s the epitome of the consummate insider.

Q: [to Gingrich]; Gov. Romney has said that the government should let the foreclosure process play out so that the housing market can recover and the free markets can work. Is he right?

GINGRICH: He’s certainly right that you want to get to the real value of the houses as fast as you can. But I think there are two specific steps you have got to understand in terms of housing. If the Congress would repeal Dodd/Frank, you would see the housing market start to improve overnight. Dodd/Frank kills small banks, it kills small business. The federal regulators are anti-housing loan, and it has maximized the pain level. You could also change some of the rules so it would be easier to do a short sale where the house is worth less than mortgage than it is to do a foreclosure. Today, the banks are actually profiting more by foreclosing than encouraging short sales. But in the long run, you want the housing market to come back? The economy has to come back.

Q: Given the resistance that we’ve seen in Washington to spending cuts, how can you possibly slash spending by 40%?

GINGRICH: If you assume Washington remains the way Washington is right now, it’s all hopeless. We might as well buy Greek bonds and go down together.

Q: How do you get us out of that?

GINGRICH: I’m going to outline a 21st century Contract with America. And it’s going to be far bolder, far deeper, far more profound than what we did in 1994. It’s important to remember that in September 1983, we created 1,100,000 new jobs. Obama’s socialist policies, class warfare, and bureaucratic socialism, we created zero in August. I believe with leadership we can balance the budget. I did it for four consecutive years. We went from $2.2 trillion projected deficit over a decade to $2.7 trillion projected surplus when I left. I think it is doable, but it takes real leadership.

Q: How do you balance the budget, when so much of the budget goes to defense and entitlements?

GINGRICH: That’s just a Washington mythology. Anybody who knows anything about the federal government knows that there’s such an enormous volume of waste, that if you simply had a serious all-all effort to modernize the federal government, you would have hundreds of billions of dollars of savings falling off. If you modernize the federal government, you save $500 billion a year. One example, the federal government is such a bad manager of money, that somewhere between $70 billion and $120 billion a year in Medicare and Medicaid is paid to crooks. We wrote a book several years ago called “Stop Paying the Crooks.” I thought it was pretty obvious even for Washington. So I would start to balance the budget by stop paying the crooks, not by cheating honest Americans.

Last night President Obama called for a sequel to his failed stimulus, proving he continues to support the same destructive, job-killing policies that created the Obama Depression. If the jobs weren’t shovel ready after his $800 billion stimulus, which the president himself admitted, why will this be different? After repeatedly calling on Congress to pass his American Jobs Act immediately–we discover there is no bill and no plan to pay for it. President Obama continues to ignore facts and instead doubles down on failed economic policies. We need real leadership now that uses proven policies from the Reagan presidency and my Speakership to empower Americans to create jobs.

Q: The chairman of the Federal Reserve, Ben Bernanke, will come to the end of his term in 2014. Would you reappoint Ben Bernanke?

GINGRICH: I would fire him tomorrow.

Q: Why?

GINGRICH: I think he’s been the most inflationary, dangerous, and power-centered chairman of the Fed in the history of the Fed. I think the Fed should be audited. I think the amount of money that he has shifted around in secret, with no responsibility, no accountability, no transparency, is absolutely antithetical to a free society. And I think his policies have deepened the depression, lengthened the problems, increased the cost of gasoline, and been a disaster.

We were asked the wrong question at the last debate. The question isn’t, would we favor a tax increase? The question is, how would we generate revenue?

There are three good ways. The Ronald Reagan technique put 3,700,000 more people back to work. You reduce government spending. You raise government revenues enormously. The “committee of 12” ought to be looking at, how do you create more revenue, not how do you raise taxes.

Second, you go to energy: You open up American energy, $500 billion a year here at home, enormous increase in federal revenue.

Third, we own 69% of Alaska. Let’s set aside [some] for national parks. We could liberate an area the size of Texas for minerals and other development. That would raise even more revenue, not the normal Washington viewpoint.

A: Look, I think this super committee is about as dumb an idea as Washington has come up with in my lifetime. The idea that 523 senators and congressmen are going to sit around for four months while 12 brilliant people, mostly picked for political reasons, are going to sit in some room and brilliantly come up with a trillion dollars or force us to choose between gutting our military and accepting a tax increase is irrational. They’re going to walk in just before Thanksgiving and say, all right, we can shoot you in the head or cut off your right leg, which do you prefer? What they ought to do is scrap the committee right now, go back to regular legislative business, and get rid of this secret phony business.

Q: You say the unemployment problem has been made worse by the policies of the Federal Reserve. You call for auditing the Fed and stripping it of its banking powers. But Rep. Paul thinks the Fed needs to be abolished to create lasting prosperity. Why is the Fed worth saving?

A: Well, I think that having some kind of central bank is an important part of how you deal with monetary policy in the modern world. But having Chairman Bernanke deal with hundreds of billions of dollars, some estimates as much as $16 trillion in secret is profoundly against a free society. The feds should be totally audited. It should be out in public. Their decision documents from 2007, 2008, & 2009 should be public. We should know who they bailed out and why they bailed them out. And who they didn’t bail out. And I think that it is a scandal that the Federal Reserve is secret. And I think, frankly, their monetary policy since the late 90s has been a major factor in the economic pain we’re now going through.

Q: Many say Obama doesn’t have a plan to deal with the debt. What’s YOUR plan?

A: Control spending. Put Americans back to work. Get back to a balanced budget as we did when I was Speaker. America believes their program will save $500 billion a year in federal spending. The federal government pays at least $150 billion a year to crooks. Any sound modern system would save at least $130 billion a year.

Source: 2011 Republican primary debate on Twitter.com , Jul 21, 2011

Insure banks rather than pass out checks

The Path to Socialist Banking

In Sep. 2008, the major brokerage houses teeter on the brink of bankruptcy.

Pres. Bush and his Treasury secretary propose a huge bailout to inject $700 billion of capital into falling financial institutions to stabilize them and stop a run on their assets. The plan is called Troubled Assets Relief Program (TARP).

Republicans in the House try to stop the bill (they had the majority then) and substitute an approach masterminded by former House speaker Newt Gingrich to insure banks rather than pass out checks to them. The House defeats the Bush bailout proposal.

John McCain “suspends” his campaign; the Republicans in the House cave in at the behest of their nominee and agree to TARP.

Democrats ask, what will the taxpayer get out of the TARP bailouts? Had the Republicans listened to Gingrich, the question would have had no force, since no money would have changed hands. But in the context of the Bush TARP bill, the question demands an answer.

Clinton wanted to raise taxes. But eventually Clinton came around to the idea of cutting the capital gains tax (which Gingrich had wanted all along). So the tax was cut. And revenue poured in! The deficit, which was supposed to take Inflation is not the only way to repay the debt. Economic growth is the other way. When Pres. Clinton dueled with House Speaker Newt Gingrich over how to balance the budget in 1995-97, each had his pet hobbyhorse. Gingrich wanted to cut spending. Yes, more. Even though the rates were lower, the economic growth they kindled brought in hundreds of billions extra each year. The proportion of taxes paid by the richest 1% rose from 37% in 2000 to 40% in 2006, even though their tax rate had been cut! 8 years to eradicate, was gone in less than 2 years.

The results of the 2001 Bush tax cut were similar. Bush sliced the top rate from Clinton’s 39.6% to 35% and cut the capital gains rate from 20% to 15%. The result? The rich paid more in taxes! MORE?

“In an amazing display of historic ignorance, economic destructiveness, and ideologically driven dishonesty, Washington politicians are in the process of combining the worst of the 1970s bad economic policies with the worst of Detroit’s economic and (America’s) educational decay. We are in grave danger of turning all of America into the kind of declining economy and bureaucratic mess which Detroit became over the last forty years.” –Newt Gingrich

Source: Saving Freedom, by Jim DeMint, p.124 , Jul 4, 2009

1995 budget: cut taxes, regulations, & spending

After the 12-year siege of Reagan-Bush, I thought the plague of Reaganism had passed. How was I to know that a more virulent strain, personified by Newt Gingrich and the Contract With America, was about to lay us low? It was rolled out, like a big legislative Trojan horse, just six weeks before the congressional elections. It was fiendishly brilliant; in the end we lost 54 seats.

The guts of that Trojan horse were taken nearly verbatim from Reagan’s 1985 State of the Union speech. The core of that speech, the heart of Reaganism, venerated the new Republican mantra of cutting taxes on wealth and slashing government spending on entitlement programs. “Entitlement” became identified with a newly-revised, all-purpose political scapegoat: the undeserving poor.

The massive budget cuts in the Gingrich Congress in 1995 were the cutting edge of Reagan’s 1985 vision of boosting growth and balancing the budget by cutting regulation on corporations, taxes on the wealthy, and spending on the poor.

Economic growth in the first quarter of 1997 was reported to be 5.6%, which pushed the estimated deficit down to $75 billion, about a quarter of what it was when I took office. On May 2, I announced that, at long last, I had reached a balanced budget agreement with Speaker Gingrich and Senator Lott and the congressional negotiations for both parties. Senator Tom Daschle also announced his support for the agreement. Dick Gephardt did not, but I was hoping he would come around once he had a chance to review it.

I met the Republicans halfway on the amount of Medicare savings. The Republicans accepted a smaller tax cut, the child health insurance program, and the big education increase. We had produced the first balanced budget since 1969, and a good one to boot. Senator Lott and Speaker Gingrich had worked with us in good faith, and Erskine Bowles, with his negotiating skills and common sense, had kept things going at critical moments.

[One of the] basic principles that I believe form the heart of our civilization [is] pragmatism and the concern for craft & excellence, as expressed most recently in the teachings of Edward Deming.

Deming’s name is not familiar to most Americans. But he embodies so many of the traits of the American character that he deserves a place in the nation’s mythology. He is already honored in Japan, where the highest annual award bestowed upon a Japanese company each year if the Deming Award for Quality. Although Deming’s work defies any easy summary, his teachings generally focus around four basic points:

The customer should be the focus of any business.

Systems, rather than individuals, should be the focus of improving production.

There has to be a theory or hypothesis before each change or action. Prediction is the key to management.

Every employee can be a key player in improving a process or product. Employees should be treated as knowledgeable contributors to their activities.

To achieve a balanced budget by 2002, both Democratic and Republican governors will tell you it’s doable, but it’s hard. I don’t think it’s doable in a year or two. I don’t think we ought to lie to the American people. This is a huge, complicated job.

I think the baby boomers are now old enough that we can have an honest dialogue about priorities, about resources, about what works, about what doesn’t.

I think on a bipartisan basis, we owe it to our children and our grandchildren to get this government in order to be able to actually pay our way. I think 2002 is a reasonable time frame and I would hope we can open a dialogue with the American people.

[As part of the Contract with America, within 100 days we pledge to bring to the House Floor the following bill]:

The Fiscal Responsibility Act:
A balanced budget/tax limitation amendment and a legislative line-item veto to restore fiscal responsibility to an out-of-control Congress, requiring them to live under the same budget constraints as families and businesses.